Master of Business Administration (2021-23)

Institue of Management
NIRMA UNIVERSITY

Business Ethics
Subject Code – MFT4CCSM01
Term -1 Individual Assignment – 1

CONCEPT PAPER: Hiring Ethics

Submitted to: Prof. Tejpal Sheth

Prepared by: Varun Rathore

Roll No. 211234 Division C

Introduction
Hiring is a never-ending process in any organization, and it involves three stages: planning, enrolling and hiring
the right candidate for the organization. The hiring manager should be aware of all the ethical responsibilities
involved in the process, many times the process has been diluted with unethical practices. For example, when
the referrer is a powerful person in an organization, the hiring manager acts in the favor of the referrer as the
hiring manager perceives to have desired future benefits. When the gain is personnel and not with respect to
the organization, then in that case, we are viewing an unethical practice. This kind of acts not only breaches the
trust and the integrity of the hiring manager but also the loss of the most deserving candidate for that position.
We will also be discussing the benefits of Ethics in Hiring.

Why Hiring should be ethically right?

If ethical awareness is present in the organization's hiring procedures, the company can minimize the infiltration
of the wrong employees in the organization. Bad apples are those individuals who are morally flawed and always
tend to behave in an unethical manner even under the presence of an immoral decision. Unethical practices
does affect the trust which the employees have in their organization. The success of the company is also
dependent on the satisfaction of the employees with the company ethical practices. More unethical practices,
the higher the loss of interest of employees and the downfall of the company. Not only this, even the name of
the company in the market gets deteriorated.
Ethical Perspective to be kept in mind by Hiring Manager

Values which determines the ethicality of action are

- People shouldn’t be hurt
- Be fair
- Creating happiness for the maximum people
- Doing your duty
- Following rules
- Maximize profit fairly
- Do unto others as you would have them do to you

Prioritize these when one knows that not all can be followed. This will help in keeping the interpersonal
values of the company. Most important interpersonal values can be classified into the three categories
under the headings:

1. Utilitarianism – It is the ethical value which sees the greatest good or happiness for the maximum
number of people. Provided the situation where we have to select between two choices –
selecting action which will benefit the maximum number of people and has a greater cause of
good or selecting action which might please an individual and doesn’t have such a great cause of
good as the first one – then, according to Utilitarianism, we should go with the first choice.
 We can find whether action is ethically right or not by examining the results under this
approach. The following value is a bit harder to visualize than maximizing the shareholder
returns. In this approach, a manager should also try to encompass those actions which will
produce greater good to the society.
If at an organization, each position is filled with an employee who performs his/her job in the
best possible manner, the greatest good for the maximum number of people will be
accomplished. For a manager, it might bring happiness in hiring someone from his/her family
or a friend or someone known, but, until he/she is not the most deserving candidate available
for the job, the utilitarianism will not judge his/her decision as ethical.

2. Rights and Duties – In this particular approach, an ethical decision is the one which respects
others’ right and the duties which rights imposes on the actor. This approach is in contrast to
utilitarianism theory as the action which violates an individual’s human rights even when its
impact is for the greater good will be considered unethical. Although there are many potential
rights, we will be discussing three of the relevant rights which are involved during the hiring
situation.

2.1. Position Rights – Hiring managers should use their position right judiciously and in the
ethically right manner. If there is a single job vacancy in their organization, and there are
10 applicants for it. In this situation, the hiring manager is supposed to select one and
reject the rest. But, hiring managers should be morally right in taking the call.

2.2. Citizen Rights – This right provides the job applicant with equal employment opportunity
law. This law ensures that the applicant is not rejected due to some non-work-related
characteristics (Gender, age and ethnicity). Hence, managers are legally bound not to
reject any applicant on this ground.

2.3. Human Rights – These are the basic human rights which every human has by virtue of
their being of their being. The right to be told the truth, personal dignity are a few of the
rights which help in making a sense of the decision imparted by the organization.

3. Fairness and Justice – Under this approach, the decision taken should be justifiable to those who
have been affected by the decision or act. The types of organization justice are

3.1. Distributive Justice – It is associated with predicting accurately the performance of the
Applicants and does not predict the performance differently for the protected subgroups
such as minorities, women and people with disability. Tools used for hiring should be
validated.
3.2. Procedural Justice – Individuals are also concerned with the procedures involved during
the process of hiring and how fair it was. Individuals who have been rejected will be
accepting the rejection if they feel that the procedure used for hiring was fair. This will
mitigate the effects of an individual who might feel that the decision was unfair.
 3.3. Interactional Justice – In this, the applicants should be treated with dignity. Rudeness
towards applicants might not be illegal, but it is surely unethical.

Ethical
S. No. Perspective : Target : Implication on Hiring Managers:
Society and Best suitable candidate might not be the best
1 Utilitarian ethics Organization choice for organization
An act or decision performed ethically which
does good to maximum number of people than
a single individual
Rights and
2 Duties
Hiring manager has duty to hire the best
2.1 Position rights Individual Applicant suitable candidate for the vacancy
Non-work characteristics shouldn't be the
2.2 Citizen Right Individual Applicant reason for rejection
2.3 Human Rights Individual Applicant Every applicant to be treated with Courtesy
Open and Honest communication to be made
with applicants
Fairness and
3 Justice
3.1 Distributive Individual Applicant Tools used for hiring should be validated
Most deserving candidate should be given job.
Effective communication way used during
3.2 Procedural Individual Applicant interview
Attention to every detail is pre-requisite
Procedure used for Hiring should be fair
3.3 Interactional Individual Applicant Every applicants be treated with high dignity
Reason of rejection should be explained to
those who are rejected

Four Step Process for making effective and ethically right Decisions in Hiring:

With the understanding of the ethical perspective, here are four step processes to make an effective, legally
defensible hiring decision which is ethically right.
1. All applicants to be treated equally – Even if the candidate is recommended by a more powerful
person in an organization, the hiring manager should treat all the applicants equally for the job
vacancy. The decision and the outcome should not be based on the referral on someone’s personal
interest.
 2. Use a maximum variety of tools in the Selection Process – this will help us to determine the KSAO
(Knowledge, Skills, Abilities and Other) Factor of the applicant. The higher the KSAO factor, the more
deserving the candidate is.
3. Keep Complete Documentation – All the documents of the interview such as test scores, resume,
LOR (Letter of Recommendations), interview notes should be filed and kept properly.
4. Legal Compliance – It’s the process in which the organization follows all regulations under law and
the business rules.

How Referrer Power in Organization Affects Ethical Hiring?

Three people who are involved in the referral process are the referral hire (applicant referred by referrer), hiring
manager (person responsible for hiring for vacancy) and referrer (Person inside organization who refers the
candidate). There is a relation between the referrer power and the Hiring Manager. In most of the cases, it has
been observed that if the referrer is holding a higher position in an organization, the hiring manager (at the
lower position) does acts in the interest of the referrer. Whereas, if the referrer is holding a lower position in an
organization, the hiring manager does not act in the interest of the referrer. The hiring manager performs this
biasing behavior for personal gains in the form of a better raise or being handed over good projects or good
rating. This kind of culture affects the Company’s culture and is being considered unethical. Of course, referral
is useful and helps in reducing the expenditure in hiring, but whether the applicant is the most deserving
candidate? It should be checked by the hiring manager. To test the same, there are several studies being made
too:

1. Study 1: This study was performed under a controlled environment in the laboratory. 148
participants were recruited from a large university in the United States for this experiment. They
were briefed about the method and procedure. Participants will be involved in a hiring simulation
and have been appointed in a hiring committed. They will be provided with 4 resumes and have to
select the most qualified out of them. They were also briefed that they would be receiving
information from other 3 members of the committee, and the final decision of hiring lies in the hands
of the team leader. All the participants made their individual choices. Then, the team leader tried to
 manipulate their choices, and it was found that the final decision of the students was changed, and
it suggested that when the hiring manager is in lower power than the referrer, the decision is made
in favor of the referrer as hiring managers perceive self-interested motives. The person in the
committee who had lower power, his referral was not considered into account much.

2. Study 2: Study 1 was performed in a controlled environment. So, to increase the overall realism, an
online experiment was conducted. In this, employees were told that they were supposed to make a
hiring decision, which in turn would affect a real-time decision. Employees were informed that a
single candidate would be given a vote which would be determined by the hiring manager (he was
also acting as a referrer). So, employees were handed over the applicant’s data, and they selected
the most suitable one. After that, they got into a conversation with the hiring manager and explained
their top choice. After listening to the employees, the hiring manager tried to manipulate their choice
by providing a completely different candidate whom the hiring manager knew from college days.
And to weight this idea, he did tell that being in the company for a long time, he knew about the
company and the job way better. After this, the employees were supposed to answer a
questionnaire. Again, we discovered that there was a high correlation and the choices of the
candidate were changed by the employees in view of perceived self-interest benefit which they
might gain in the future by changing their opinion with hiring manager opinion.

3. Study 3: This study was organized to increase the validity of the experiment externally. So, in this
case, those employees were hired who were indulged in referral-hiring decisionss in the past in their
company. When the questionnaire was provided to them about the referral-based hiring decision, it
was discovered that they also change their choice with the perceived self-interest benefit, which they
might gain in the future.
These three experiments validated the assumption which was stated earlier. So, a hiring manager
must be careful and wise enough against referrals while making a decision on hiring. Especially when
the decision is only considered to benefit the referrer.

Common Themes for Ethical Employee Selection:

There are many common themes for defining the ethical practices which are needed for the selection of
the most deserving candidate ethically. However, the most important ideas are as follows: Moral
Obligation, Anti-discrimination practices, integrity based approaches, need for Honest Communication
and Diversity.

1. Moral Obligation – If moral behavior is practiced in an organization, it builds trust among employees,
customers, suppliers and distributors. Also, the company earns public goodwill in society. Hiring the
most deserving candidate is a responsibility which shouldn’t be taken lightly by the hiring manager.
Setting an ethical climate in the company is an obligation of a manager. It does have its own strength
as stated above. The hiring manager needs to identify the ethical character of the candidate. This
 can be done through behavioral questions and traits to be checked are self-discipline, and personal
virtues and openness.

2. Anti-discrimination Practices – As discussed earlier in the paper, every human has basic human rights.
Rejecting someone based on their class status is an unethical practice. Even the organization can
affect their public image if they perform any form of discrimination.
3. Diversity – Hiring employees with different backgrounds does more good than harm as people will
have a broader idea and vision towards a problem provided. Diversity among employees means
differences based on religion, sex, caste, experience, education, etc. The idea of embracing
differences is very crucial for hiring managers to understand.
4. Integrity Based Approaches – Honest communications with respect to the ethical expectations are
to be conveyed to the applicants before disclosing the vacancy. An employee selected via an ethical
process will appreciate the honesty and integrity of the company and will spread the good word too.
Integrity should act as a guiding corporate principle.
5. Fairness – The whole process used for the hiring should be ethical and fair towards the audience of
applicants. The decision of selection should be made in an unbiased manner. Try constructing core
guiding principles and organizational values. Also, hiring manager needs to ensure that, all the
applicants have clearly understood the ethical expectation of the firm.

Conclusion: Even though ethical business practices are considered good, it might not be the most profitable
way. In fact, ethical practices might not be profitable ever. But, it is the moral responsibility of the hiring
managers to do the best of their circumstances. Hiring managers are the gate keepers of an organization. The
most suitable candidate who enters through those gates will be representing the company in the future and
taking on the values which have been led since the foundation of the company. Unethical practices used to
make the hiring decision biased, or the referring made by a powerful individual during hiring will only sublime
the values which the company incorporates. In the shorter run, the hiring managers might not realize the unfair
deeds incorporated while hiring but, in the longer run, he/she opens the exit gates for themselves. Adhering to
ethical standard and moral while making any decision enhances the ability to make a better choice in the interest
of the company. A thorough, systematic process with necessary documentation and compliance to all the laws
should be followed stringently while hiring. Perceiving personal gains by unethical practice is an immoral act on
a personal level.
 References:

1. https://web.a.ebscohost.com.elibrary.nirmauni.ac.in/ehost/pdfviewer/pdf
viewer?vid=0&sid=1122a6f5-47b2-42da-bbd3-8d92d795cdee%40sdc-v-
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- COMPROMISED ETHICS IN HIRING PROCESSES? HOW REFERRERS’ POWER AFFECTS EMPLOYEES’ REACTIONS
TO REFERRAL PRACTICES by FRANCESCA GINO Harvard University

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3. https://web.a.ebscohost.com.elibrary.nirmauni.ac.in/ehost/pdfviewer/pdf
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